European Parliament legislative resolution of 22 April 2009 on the proposal for a regulation of the European Parliament and of the Council laying down the obligations of operators who place timber and timber products on the market (COM(2008)0644 – C6-0373/2008 – 2008/0198(COD))

(Codecision procedure – first reading)

The European Parliament
,

– having regard to the Commission proposal to the European Parliament and the Council (COM(2008)0644),

– having regard to Article 251(2) and Article 175(1) of the EC Treaty, pursuant to which the Commission submitted the proposal to Parliament (C6-0373/2008),

– having regard to Rule 51 of its Rules of Procedure,

– having regard to the report of the Committee on the Environment, Public Health and Food Safety and the opinions of the Committee on Development and the Committee on International Trade (A6-0115/2009),

1. Approves the Commission proposal as amended;

2. Calls on the Commission to refer the matter to Parliament again if it intends to amend the proposal substantially or replace it with another text;

3. Instructs its President to forward its position to the Council and Commission.

Position of the European Parliament adopted at first reading on 22 April 2009 with a view to the adoption of Regulation
(EC)No .../2009
of the European Parliament and of the Council laying down the obligations of operators who place timber and timber products on the market

Acting in accordance with the procedure laid down in Article 251 of the Treaty(3)
,

Whereas

(1) Forests provide a broad variety of environmental, economic and social benefits including timber and non-timber forest products, environmental services and habitats for local communities.

(2)The forest environment is a precious heritage that must be protected, preserved and, where practicable, restored with the ultimate aim of maintaining biodiversity and ecosystem functions, protecting the climate, and safeguarding the rights of indigenous peoples and local and forest-dependent communities.

(3)Forests are an economic resource, the cultivation of which generates prosperity and employment. The cultivation of forests also has positive effects on the climate since forest products can replace more energy-consuming products.

(4)It is of great importance, particularly from a climate point of view, that subcontractors operating on the Community market only market legally harvested timber since such timber ensures that the important function of forests as carbon dioxide sinks is not disrupted. In addition, the use of legally harvested timber as building material, in wooden houses, for example, helps to lock in carbon dioxide on a long-term basis.

(5)Forestry accounts for a very large part of social and economic development in developing countries and constitutes the primary source of income in such countries for many people. It is therefore important not to curb this development and source of income but to focus on how to promote a more sustainable development of forestry in those countries.

(6) Due to the growing demand for timber and timber products worldwide,
in combination with the institutional and governance deficiencies that are present in the forest sector in a number of timber-producing countries,
illegal logging and the associated trade have become matters
of ever greater concern.

(7)It is evident that pressure on natural forest resources and the demand for timber and timber products are often too high and that the Community needs to reduce its impact on forest ecosystems regardless of where their effects occur.

(8) Illegal logging, in combination with institutional and governance deficiencies in the forest sector of a significant number of timber-producing countries,
is a pervasive problem of major international concern. Illegal logging
poses a significant threat to forests as it contributes to the process of deforestation and forest degradation
, which is responsible for about 20 % of CO2 emissions, influences the desertification and steppe-formation process, increasing soil erosion and exacerbating extreme weather events and the flooding which may ensue,
threatens biodiversity, damages indigenous peoples" habitats
and undermines sustainable forest management and development. In addition, it also has social, political and economic implications, often undermining progress towards good governance goals, and threatens local forest-dependent communities and the rights of indigenous peoples
.

(9)The aim of this Regulation is to halt the trade in illegally harvested timber and products made from such timber in the EU and to contribute to stopping deforestation and forest degradation and related carbon emissions and biodiversity loss globally while promoting sustainable economic growth, sustainable human development and respect for indigenous and local peoples. This Regulation should contribute to the fulfilment of obligations and commitments contained in, inter alia: the Convention on Biological Diversity of 1992 (CBD); the Convention on International Trade in Endangered Species of Wild Fauna and Flora of 1973 (CITES); the International Tropical Timber Agreements (ITTAs) of 1983, 1994 and 2006; the United Nations Framework Convention on Climate Change of 2002 (UNFCCC); the United Nations Convention to Combat Desertification of 1994; the Rio Declaration on Environment and Development of 1992; the Johannesburg Declaration and Plan of Implementation as adopted by the World Summit on Sustainable Development on 4 September 2002; the proposals for action of the UN Intergovernmental Panel on Forests, endorsed by the 1997 United Nations General Assembly Special Session (Ungass), and of the UN International Forum on Forests; the United Nations Conference on Environment and Development (UNCED) non-legally binding authoritative statement of principles for a Global Consensus on the Management, Conservation and Sustainable Development of All Types of Forests of 1992; Agenda 21 as adopted by UNCED in June 1992; the Ungass resolution on the "Programme for the further implementation of Agenda 21" of 1997; the Millennium Declaration of 2000; the World Charter for Nature of 1982; the Declaration of the United Nations Conference on the Human Environment of 1972; the 1972 Action Plan for Human Environment; the United Nations Forum on Forests, Resolution 4/2; the Convention on European Wildlife and Habitats of 1979; the UN Convention against Corruption of 2003 (UNCAC).

(10)Decision No 1600/2002/EC of the European Parliament and of the Council of 22 July 2002 laying down the Sixth Community Environment Action Programme(4) has identified as a priority activity the examination of the possibility of taking active measures to prevent and combat trade in illegally harvested wood and the continuation of the active participation of the Community and of Member States in the implementation of global and regional resolutions and agreements on forest-related issues.

(11) The Commission
Communication of 21 May 2003 entitled "
Forest Law Enforcement, Governance and Trade (FLEGT): Proposal for an EU Action Plan"(5)
proposed a package of measures to support international efforts to tackle the problem of illegal logging and associated trade and to contribute to the wider objective of sustainable forest management
.

(12) The Council and the European Parliament,
recognising the need for the Community to contribute to global efforts to address the problem of illegal logging and to support sustainable legal logging within the framework of sustainable development, sustainable forest management and poverty reduction, as well as social equity and national sovereignty,
welcomed that Communication.

(13) In accordance with the aim of that Communication, namely to ensure that only timber products that have been produced in accordance with the national legislation of the producing country enter the Community, the Community has been negotiating Voluntary Partnership Agreements (VPAs) with timber producing countries (partner countries), which put a legally binding obligation on the parties to implement a licensing scheme and to regulate trade in timber and timber products identified in the VPAs
.

(14)The Community should also push, in bilateral talks with major timber-consuming countries such as the US, China, Russia, and Japan, for discussions in relation to the problem of illegal logging, for convergence towards harmonised appropriate obligations on operators on their own timber market, and for the creation of an independent, global alert system and register of illegal logging consisting for example of Interpol and an appropriate UN body, benefiting from the latest satellite detection technologies.

(15)Operators from countries with forests of international ecological importance should have a particular responsibility for the sustainable exploitation of timber.

(16) Given the major scale and urgency of the problem, it is necessary to actively support the fight against illegal logging and related trade, to reduce the Community's impact on forest ecosystems
, to complement and strengthen the VPA initiative and to improve synergies between policies aiming at poverty reduction,
the conservation of forests and the achievement of a high level of environmental protection, including combating climate change and biodiversity loss.

(17)Based on the principle of preventive action, all supply chain actors should share responsibility for eliminating the risk of illegally harvested timber and timber products being made available on the market.

(18) The efforts made by countries which have concluded FLEGT VPAs with the Community and the principles incorporated in them, in particular with regard to the definition of legally produced timber, should be recognised. It should be also taken into account that under the FLEGT licensing scheme only timber and timber products harvested in accordance with the relevant national legislation are exported into the Community. To that effect, timber products listed in Annexes II and III to Council Regulation (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community(6)
, originating in partner countries listed in Annex I to that
Regulation,
should be considered to have been legally harvested provided they comply with that Regulation and any implementing provisions. The principles set out in the VPAs, particularly with regard to the definition of "legally produced timber" must include and guarantee sustainable forest management, the maintenance of biodiversity, the protection of local forest-dependent communities and of the indigenous peoples, and the safeguarding of the rights of those communities and peoples.

(19) Account should also be taken of the fact that the Convention on International Trade of Endangered Species of Fauna and Flora (CITES) places a requirement on parties to the Convention only
to ║ grant a CITES permit for export when a CITES-listed species has been harvested, inter alia,
in compliance with domestic legislation in the exporting country. To that effect, timber products of species listed in Annexes A, B and C to Council Regulation (EC) No 338/97 of 9 December 1996 on the protection of species of wild fauna and flora by regulating trade therein(7)
should be considered to have been legally harvested provided they comply with that Regulation and any implementing provisions.

(20) Taking into account the complexity of illegal logging as regards the underlying factors and the impacts, the incentives for illegal behaviour should be reduced by targeting the behaviour of operators. Strengthening requirements and obligations and enhancing the legal means to prosecute operators for possession of illegal timber and timber products and for placing or making available such timber and timber products on the Community market are among the most effective solutions to deter operators from trading with illegal suppliers.

(21) In the absence of an internationally agreed definition the legislation of the country where the timber was harvested should be the primary
basis to define what constitutes illegal logging. The application of legality standards should involve further consideration of international standards including, inter alia, those of the African Timber Organisation; the International Tropical Timber Organisation; the Montreal Process on Criteria and Indicators for the Conservation and Sustainable Management of Temperate and Boreal Forests; and the Pan-European Forest Process on Criteria and Indicators for Sustainable Forest Management. Such application of legality standards should contribute to the implementation of international commitments, principles and recommendations including those concerning mitigation of climate change, reduction of biodiversity loss, alleviation of poverty, reduction of desertification and the protection and promotion of the rights of indigenous peoples and of local and forest-dependent communities. The timber-harvesting country should provide an inventory of total legal logging including details of tree species and maximum timber production.

(22) Many timber products undergo numerous processes before and after they are placed on the market for the first time. In order to avoid imposing any unnecessary administrative burden only those operators that place timber and timber products on the market for the first time, rather than all operators involved in the distribution chain, should be subject to the requirement to put in place a full system of measures and procedures (due diligence system) to minimise the risk of placing illegally harvested timber and timber products on the market. However all operators in the supply chain should be bound by the overriding prohibition against making illegally sourced timber or timber products available on the market, and must exercise due care to this effect.

(23)All operators (traders and producers) in the timber and timber product supply chains on the Community market should clearly indicate on the products on offer the source or supplier from which the timber originates.

▌

(24) Operators placing timber and timber products for the first time on the Community market should exercise due diligence through a ║due diligence system║ to minimise the risk of placing illegally harvested timber and timber products.

(25) The due diligence system should provide access to the sources and suppliers of the timber and timber products being placed on the Community market and to information as regards compliance with the applicable legislation.

(26)In implementing this Regulation, the Commission and the Member States should take special account of the particular vulnerability and limited resources of small and medium-sized enterprises (SMEs). It is extremely important that SMEs are not burdened by complicated rules which impede their development. The Commission should, therefore, as far as possible and on the basis of the mechanisms and principles set out in the forthcoming Small Business Act, devise simplified systems in respect of SMEs' obligations under this Regulation, without jeopardising its object and purpose, and offer SMEs valid alternatives to enable them to operate in line with Community legislation.

(27) ▌In order to facilitate the implementation of this Regulation and to contribute to the development of good practices, it is appropriate to recognise organisations which have developed suitable and effective
requirements for the realisation of the due diligence systems. A list of such recognised organisations should
be made public. ▌

(28)For the same purpose, the European Union should encourage the above-mentioned organisations to cooperate with environmental organisations and human rights organisations in order to support due diligence systems and the monitoring thereof.

(29) Competent authorities should monitor that ║ operators fulfil the obligations laid down in this Regulation. For that purpose the competent authorities should carry out official controls, including customs checks,
and require operators to take corrective measures where necessary.

(30) Competent authorities should keep records of the controls
and make a summary publicly available in accordance with Directive 2003/4/EC of the European Parliament and of the Council of 28
January 2003 on public access to environmental information(8)
.

(31) Taking into account the international character of illegal logging and related trade,
competent authorities should cooperate between themselves and with environmental organisations, human rights organisations, and
the administrative authorities of third countries and/or the Commission.

(32) Member States should ensure that infringements of this Regulation are punished by effective, proportionate and dissuasive penalties.

(33) The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission(9)
.

(34) In particular,
the Commission should be empowered to adopt detailed rules for the application of the due diligence system and in particular criteria for assessing the risk of placing illegally harvested timber and timber products on the market, to establish criteria for the recognition of due diligence systems developed by monitoring organisations and to adapt the list of timber and timber products to which this Regulation applies where technical characteristics, end uses or production processes of timber or timber products necessitate such adaptations. Since those measures are of general scope and are designed to amend non-essential elements of this Regulation by supplementing it with new non-essential elements, they must be adopted in accordance with the regulatory procedure with scrutiny provided for in Article 5a of Decision 1999/468/EC.

▌

(35)Development in sustainable forestry is an ongoing process and this Regulation should, therefore, be evaluated, updated and amended on a regular basis in line with the results of new research. The Commission should therefore regularly analyse the latest available research and development and present the conclusions of its analysis and proposed amendments in a report to the European Parliament.

(36)In order to ensure a smoothly operating internal market in forest products, the Commission should analyse the impact of this Regulation on an ongoing basis. Particular account should be taken of the implications of the Regulation for SMEs operating on the Community market. The Commission should, therefore, accordingly and on a regular basis, carry out a study and impact analysis of the effects of the Regulation on the internal market, with particular reference to SMEs, in addition to its impacts on sustainable forest management. The Commission should subsequently present a report of its analysis, its conclusions and proposals for measures to the European Parliament.

(37) Since the objectives
of this Regulation, namely to complement and underpin the existing policy framework and support the fight against illegal logging and related trade, cannot be sufficiently achieved by the Member States and can therefore, by reason of its scale,
be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out on Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives,

HAVE ADOPTED THIS REGULATION:

Article 1

Subject matter
and objective

This Regulation lays down the obligations of operators who place or make available
timber and timber products on the market.

Operators shall ensure that only legally harvested timber and timber products are made available on the market.

Operators who place timber and timber products on the market shall use a due diligence system.

Article 2

Definitions

For the purposes of this Regulation, the following definitions shall apply:

(a)

"timber and timber products' means the timber and timber products set out in the Annex without exception
;

(b)

"making available on the market' means any supply of timber and timber products on the Community market for distribution or use in the course of a commercial activity whether in return for payment or free of charge;

(c)

"placing on the market' means the first making available of timber and timber products on the Community market
; subsequent processing and distribution of timber does not constitute 'placing on the market';

(d)

"operator' means any natural or legal person that places or makes available on the market
timber or timber products ▌;

(e)

"legally harvested' means harvested in accordance with the applicable legislation in the country of harvest;

(f)

"risk' means a function of the probability of timber or timber products from an illegal source being imported into, exported from or traded in the territory of the Community and the severity of such an event;

(g)

"risk management' means the systematic identification of risks and the implementation of
a set of measures and procedures ▌in order to minimise the risk of placing illegally harvested timber and timber products on the market;

(h)

"applicable legislation' means ▌legislation, whether national, regional or international, in particular that concerning the conservation of biological diversity, forest management, resource use rights and the minimisation of adverse environmental impacts; it should also take into account property tenure, rights of indigenous people, labour and community welfare legislation, taxes, import and export duties, royalties or fees related to harvesting, transportation and marketing
;

(i)

'Sustainable forest management
' means the management and use of forests and wooded lands in a way, and at a rate, that maintains their biological diversity, productivity, regeneration capacity, vitality and their potential to fulfil, now and in the future, relevant ecological, economic and social functions, at local, national, and global levels, without causing any damage to other ecosystems;

(j)

"country of harvest' means the country where the timber or the timber embedded in the timber products was harvested;

(k)

"monitoring organisation' means a legal entity or a membership-based association ▌that has the legal capacity and appropriate expertise
to monitor and ensure the application of due diligence systems by the operators certified as making use of such systems, and which is legally independent from the operators it certifies
;

(l)

"traceability' means the ability to trace and follow timber or timber products through all stages of production, processing and distribution.

Article 3

Obligations of operators

1. Operators shall ensure that they place or make available on the market only legally harvested timber and timber products.

2. Operators who place timber and timber products on the market
shall establish a due diligence system containing the elements referred to in Article 4 ║ or make use of a due diligence system of a recognised monitoring organisation referred to in Article 6
(1).

Existing national legislative supervision and any voluntary chain of custody mechanism which fulfil the requirements under this Regulation may be used as a basis for the due diligence system.

3.Operators who make timber and timber products available on the market shall, throughout the supply chain, be able to:

(i)

identify the operator who has supplied the timber and timber products, and the operator to whom the timber and timber products have been supplied;

(ii)

provide upon request information on the name of the species, the country/countries of harvest and where feasible the concession of origin;

(iii)

check, where necessary, that the operator who has placed the timber and timber products on the market has fulfilled his obligations under this Regulation.

4
. Timber products listed in Annexes II and III to Regulation (EC) No 2173/2005 originating in partner countries listed in Annex I of that
Regulation ║and which comply with that Regulation and its implementing provisions shall be considered to have been legally harvested for the purposes of this Regulation.

5
. Timber products of species listed in Annexes A, B and C to Regulation (EC) No 338/97 and which comply with that Regulation and its implementing provisions shall be considered to have been legally harvested for the purposes of this Regulation.

Article 4

Due diligence systems

1. The due diligence system referred to in Article 3(2)
shall:

(a)

ensure that only legally harvested timber and timber products are placed on the market, employing a traceability system and third party verification by the monitoring organisation;

(b)

comprise measures to ascertain:

(i)

country of origin, forest of origin and, where feasible, concession of harvest;

(ii)

name of the species, including scientific name
;

(iii)

value;

(iv)

volume and/or weight
;

(v)

that the timber or the timber embedded in the timber products has been legally harvested;

(vi)

the name and address of the operator who has supplied the timber and timber products;

(vii)

the natural or legal person responsible for harvesting;

(viii)

the operator to whom the timber and timber products have been supplied.

(c)

include a risk management procedure which shall consist of the following:

(i)

systematic identification of risks, inter alia through collecting data and information and making use of international, Community or national sources;

(ii)

implementation of all measures necessary for limiting exposure to risks;

(iii)

establishing procedures which shall be carried out regularly to verify that the measures set out in points (i) and (ii) are working effectively and to review them where necessary;

(iv)

establishing records to demonstrate the effective application of the measures set out in points (i) to (iii).

(d)

provide for audits to ensure effective application of the due diligence system.

2. The Commission shall adopt measures for the implementation of this Article with a view to ensuring uniformity of interpretation of the rules and effective compliance by operators
. The Commission shall, in particular, establish criteria for assessing whether there is a risk of illegally harvested timber and timber products being placed on the market. In doing so, the Commission shall take particular account of the special position and capacity of SMEs and, as far as possible, offer those enterprises adapted and simplified alternatives to reporting and control systems so that those systems do not become too burdensome.

Based on factors related to the product type, source or complexity of the supply chain, certain categories of timber and timber products or suppliers shall be considered 'high risk', requiring extra due diligence obligations from the operators.

Extra due diligence obligations may, inter alia, include:

–

requiring additional documents, data or information;

–

requiring third party audits.

Timber and timber products from the following shall be considered as "high risk" by operators under this Regulation:

–

conflict areas, or countries / regions covered by a UN Security Council ban on timber exports;

–

countries where there is consistent and reliable information regarding significant failures of forest governance, a low level of forest law enforcement or a high level of corruption;

–

countries where official Food and Agriculture Organisation (FAO) statistics show a decrease in forest area;

–

supplies where information on potential irregularities supported by reliable evidence, that has not been disproved by investigation, has been made available from customers or external parties.

The Commission shall make available a register of high-risk sources of timber and timber products or suppliers.

Those measures,
designed to amend non-essential elements of this Regulation by supplementing it,
shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 12
(2).

Relevant stakeholders shall be consulted prior to the adoption of additional implementing measures.

3.Individual Member States shall not be prevented, with regard to access to the market for timber and timber products, from setting more stringent requirements for the harvesting and origin of timber than laid down in this Regulation, in respect of sustainability, the protection of the environment, the conservation of biodiversity and the ecosystem, the protection of local communities" habitats, the protection of forest-dependent communities, the protection and rights of indigenous peoples and human rights.

Article 5

Labelling

Member States shall ensure that by …(10) all timber and timber products placed and made available on the market are labelled, as appropriate, with the information specified in Article 3(3).

Article 6

Recognition of monitoring organisations

1. The Commission shall, in accordance with the regulatory procedure referred to in Article 12(3),
recognise as a
monitoring organisation a private or public entitywhichhas established a due diligence system which contains the elements set out in Article 4(1).

2.A public entity applying for the recognition provided for in paragraph 1 shall comply with the following requirements:

(a)

it has legal personality;

(b)

it is governed by public law;

(c)

it has been established to carry out particular functions regarding the forest sector
;

(d)

it is financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law;

(e)

it obliges operators it certifies to use its due diligence system
;

(f)

it has in place a monitoring mechanism to ensure the use of the due diligence system
by the operators which it has certified as making use of its due diligence system;

(g)

it takes appropriate disciplinary measures against any certified operator who fails to comply with its
due diligence system; disciplinary measures shall include reporting the matter to the relevant national competent authority;

(h)

it has no conflict of interest with the competent authorities.

3.A private entity applying for the recognition provided for in paragraph 1 shall comply with the following requirements:

(a)

it has legal personality;

(b)

it is governed by private law;

(c)

it has appropriate expertise;

(d)

it is legally independent from the operators it certifies;

(e)

the operators it certifies are bound by the entity's articles of association to use its due diligence system;

(f)

it has in place a monitoring mechanism to ensure the use of the due diligence system by the operators which it has certified as making use of its due diligence system;

(g)

it takes appropriate disciplinary measures against any certified operator who fails to comply with its due diligence system; disciplinary measures shall include reporting the matter to the relevant national competent authority.

4. The monitoring organisation shall submit to the Commission
the following information together with its application for recognition:

(a)

its statute;

(b)

the names of persons authorised to act on its behalf;

(c)

documentation to demonstrate its appropriate expertise;

(d)

a detailed description of its due diligence system.

5.In accordance with the regulatory procedure referred to in Article 12(3), the Commission
shall decide whether to grant recognition to a monitoring organisation within three months of the submission of an application by the monitoring organisation or a recommendation from the competent authority of a Member State that it is recommending the organisation for recognition.

The decision to grant recognition to a monitoring organisation shall be communicated by the Commission to the competent authority of the Member State with jurisdiction over that organisation, together with a copy of the application, within 15 days of the date of the decision.

Member State competent authorities
shall carry out checks, including field-based audits,
at regular intervals, or on the basis of substantiated concerns from third parties,
to ascertain that monitoring organisations comply with the requirements laid down in paragraph 1. The check reports shall be made available to the public.

If, following those checks, competent authorities ascertain that monitoring organisations do not comply with the requirements laid down in paragraphs 1 and 2 or paragraphs 1 and 3, they shall forthwith inform the Commission and communicate to it any relevant evidence in that regard.

6.In accordance with the regulatory procedure referred to in Article 12(3), the Commission
shall withdraw the recognition of a monitoring organisation if it has been established that the requirements set out in paragraphs 1 and 2 or paragraphs 1 and 3
are no longer fulfilled.

7. Competent authorities shall notify the Commission within two months of any decision to recommend the granting, refusal or withdrawal of recognition of any monitoring organisation.

8.
The Commission shall adopt measures for the implementation of this Article.

Those measures designed to amend non-essential elements of this Regulation by supplementing it shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 12
(2).

Article 7

List of monitoring organisations

The Commission shall publish the list of the recognised
monitoring organisations ▌in the Official Journal of the European Union, C series, and shall make it available on its website. The list shall be regularly updated.

Article 8

Monitoring
and control
measures

1. Competent authorities shall carry out controls
to verify if operators comply with the requirements set out in Article 3(1),
(2) and (3)
and Article 4(1).

2.Controls shall be conducted in accordance with a yearly plan and/or on the basis of substantiated concerns provided by third parties; or in any event where the competent authority of the Member State is in possession of information that questions compliance by the operator with the requirements for due diligence systems set out in this Regulation.

3.Controls may include, inter alia:

(a)

examination of the technical and managerial systems and procedures of due diligence and risk assessment that the operators use;

(b)

examination of documentation and records that demonstrate the proper functioning of the systems and procedures;

(c)

spot checks, including field audits.

4.Competent authorities shall be equipped with a reliable traceability system to track internationally traded timber products and with public monitoring systems to assess the performance of operators in complying with their obligations and to help operators identify suppliers of high-risk timber and timber products.

5. Operators shall offer all assistance necessary to facilitate the performance of the controls
referred to in paragraph 1, notably as regards access to premises and the presentation of documentation or records
.

6.If, following
the controls
referred to in paragraph 1, the operator is presumed to have infringed the requirements set out in Article 3,
the competent authorities may in accordance with their national legislation start a full investigation of the infringement and, in conformity with national law and depending on the gravity of the infringement, take immediate measures which may inter alia include:

(a)

the immediate cessation of commercial activities; and

(b)

the seizure of timber and timber products.

7.Any immediate measures taken by the competent authorities shall be of such nature as to prevent the continuation of the infringement concerned and to allow the competent authorities to complete their investigation.

8.Where the competent authorities find that the technical and managerial systems and procedures of due diligence and risk assessment are not sufficient, they shall require the operator to take corrective measures
.

Article 9

Records of
controls

1. Competent authorities shall keep records of the controls
referred to in Article 8
(1), indicating in particular their nature and results, including any corrective measures requested to be taken. Records of all controls
shall be kept for at least 10 years.

2. The
records referred to in paragraph 1 shall be made available to the public on the Internet
in accordance with Directive 2003/4/EC.

Article 10

Cooperation

1. Competent authorities shall cooperate with each other and with administrative authorities of third countries and with the Commission in order to ensure compliance with this Regulation.

2. The competent authorities shall exchange information on the results of the controls
referred to in Article 8
(1) with the competent authorities of other Member State(s) and with the Commission.

Article 11

Competent authorities

1. Each Member State shall designate one or more competent authorities responsible for the application of this Regulation. These authorities shall be given sufficient powers to enforce this Regulation by monitoring its application, investigating alleged infringements in cooperation with the customs authorities, and reporting offences to the prosecuting authority in a timely manner.

Member States shall inform the Commission of the names and addresses of the competent authorities by 31 December …
. Member States shall inform the Commission of any changes to the names or addresses of the competent authorities.

2. The Commission shall make publicly available on the Internet
the list of the competent authorities. This list shall be kept up-to-date.

Article 12

Committee

1. The Commission shall be assisted by the Committee on Timber Trade║.

2. Where reference is made to this paragraph, Article 5a (1) to (4) and Article 7 of Decision 1999/468/EC shall apply, having regard to the provisions of Article 8 thereof.

3.Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply, having regard to the provisions of Article 8 thereof.

Article 13

Development of sustainability requirements

By …(11), the Commission shall present a legislative proposal to the European Parliament and the Council on a Community standard for all timber and timber products sourced from natural forests aimed at achieving the highest sustainability requirements
.

2.Representatives of Member States may participate in the meetings either on their own initiative or upon invitation by the Advisory Group.

3.The Advisory Group shall set its rules of procedure which shall be made public on the Commission's website.

4.The Commission shall provide the technical and logistical support necessary for the Advisory Group and provide the secretariat for its meetings.

5.The Advisory Group shall examine and issue opinions on matters relating to the application of this Regulation raised by the chairman, either on his own initiative or at the request of the members of the Advisory Group or the Committee.

6.The Commission shall convey the opinions of the Advisory Group to the Committee.

Article 15

Amendments

The Commission may add to
the list of timber and timber products set out in the Annex taking into account technical characteristics, end-uses and production processes.

Those measures,
designed to amend non-essential elements of this Regulation by supplementing it,
shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 12
(2).

Article 16

Penalties

The Member States shall lay down the rules on penalties applicable to infringements of the provisions of this Regulation and shall take all measures necessary to ensure that they are implemented. The penalties provided for may be criminal or administrative,
must be effective, proportionate and dissuasive, and shall include, where appropriate, inter alia
:

(a)

financial penalties reflecting:

–

the degree of environmental damage;

–

the value of the timber products concerned by the infringement;

–

the tax losses and economic damage occasioned by the infringement;

(b)

seizure of timber and timber products;

(c)

temporary prohibition from marketing timber and timber products.

Where legal proceedings are pending, operators shall suspend sourcing timber and timber products from the areas in question.

Financial penalties shall represent at least five times the value of the timber products obtained by committing a serious infringement. In the case of a repeated serious infringement within a five-year period, the financial penalties shall gradually increase up to at least eight times the value of the timber products obtained by committing a serious infringement.

Without prejudice to other provisions laid down in Community law, pertaining to public funds, Member States shall not grant any public aid under national aid regimes or under Community funds to operators convicted of a serious infringement of this Regulation, until corrective measures have been taken and effective, proportionate and dissuasive penalties have been applied
.

The Member States shall notify the
provisions on penalties
to the Commission by 31 December … and shall notify it without delay of any subsequent amendment affecting them.

Article 17

Reporting

1. Member States shall submit to the Commission for the first time
by …(12)and
every second year thereafter
a report on the application of this Regulation during the previous two years.

2. On the basis of those reports the Commission shall draw up a report to be submitted to the European Parliament and to the Council every two years.

3.In preparing the report referred to in paragraph 2, the Commission shall have regard to the progress made in respect of the conclusion and operation of the FLEGT VPAs adopted pursuant to Regulation (EC) No 2173/2005. The Commission shall consider whether any revisions of this Regulation are required in the light of experience of the operation of the FLEGT VPAs and their effectiveness in addressing the problem of illegal timber.

Article 18

Amendment to Directive 2008/99/EC

Directive 2008/99/EC of the European Parliament and of the Council of 19 November 2008 on the protection of the environment through criminal law(13) is hereby amended, with effect from …(14), as follows:

(1)The following point shall be added to Article 3:
"

(ia) the making available on the market of illegally harvested timber or timber products.

"

(2)The following indent shall be added to Annex A:

–Regulation (EC) No …/2009 of the European Parliament and of the Council of ... laying down the obligations of operators who place timber and timber products on the market.

Article 19

Review

By …(15)
*, and every five years thereafter, the Commission shall carry out a review of the operation of this Regulation in regard to its object and purpose and report its conclusions and, on the basis thereof, its proposals for amendments, to the European Parliament.

The review shall focus on the following:

–

a detailed and thorough analysis of research and development in the field of sustainable forestry;

–

the impact of this Regulation on the internal market, with particular reference to the competitive situation and the ability of new players to establish themselves on the market;

–

the situation of SMEs on the market and how this Regulation has affected their activities.

Article 20

Entry into force

This Regulation shall enter into force on the seventh day following that of its publication in the Official Journal of the European Union.

5. Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; wood in chips or particles; sawdust and wood waste and scrap, whether or not agglomerated in logs, briquettes, pellets or similar forms of CN code 4401;

6. Builders" joinery and carpentry of wood, including cellular wood panels, assembled flooring panels, shingles and shakes, wood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rebated, chamfered, V-jointed, beaded, moulded, rounded or the like) along any of its edges, ends or faces, whether or not planed, sanded or end-jointed of CN code 4418;

7. Particle board, oriented strand board (OSB) and similar board of wood whether or not agglomerated with resins or other organic binding substances of CN code 4410;

8. Fibreboard of wood or other ligneous materials, whether or not bonded with resins or other organic substances of CN code 4411;